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How Will Apple Price Its Low Cost iPhone 5C?

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Apple CEO Tim Cook is expected to take the stage in less than 24 hours from now, at a special media event to be held in Apple’s town hall at its Cupertino headquarters, and unveil the company’s next generation iPhones. In addition to iPhone 5S, the latest successor to company’s flagship smartphone, Apple is also believed to introduce a cheaper iPhone 5C, targeted primarily at the low- to mid-tier market. However, the real question in everyone’s mind right now is that how cheap the lower-priced iPhone will actually be?

Iphone5c boxes Hajek

Of course we wont know for sure until tomorrow, Ben Thompson from Stratechery believes it’s not likely to be as cheap as many are hoping it to be. He expects Apple to price the so-called iPhone 5C somewhere between $450 and $550, potentially establishing a new mainstream price band between the smartphone market’s high end and its low end. “Given the high bar Apple has set (iPhone 5 technology), I expect the iPhone 5C’s price to be on the high end of estimates, and possibly higher”, he says.

SO WHAT IS THE PRICE?

The fact the 5C needs to be sold in both subsidized and unsubsidized markets makes the pricing tricky; in subsidized markets, Apple is currently receiving a subsidy of around $450 on the iPhone 5. It wouldn’t make sense to unilaterally lower that – after all, it’s not like the carriers are going to lower iPhone service bills. This sets a floor of $450 for the unsubsidized 5C ($0 with contract). This also lets Apple dump the 4S, with its 3.5? screen, 30-pin connector, and lack of LTE.

In other words, to answer this section’s heading, I’m still not sure. Something has to give, whether it be the subsidy amount, avoiding the brand association with $0, or a too-high price.

Meanwhile, Morgan Stanley’s Katy Huberty analysed the data collected from a recent survey of 2,000 Chinese mobile phone owners, according to which Chinese customers believe $486 to be an “acceptable” price range for the iPhone 5C (via AllThingsD). She also noted that if Apple were to launch the iPhone 5C in Greater China at that price point, the company would drastically spike iPhone sales in the region.

“If that’s the case, why not drop the iPhone 5C’s price lower still to drive further market share gains? Because doing so might sacrifice product quality and profit margins. And because, historically, Apple has done quite well for itself using mid-tier products with lots of aspirational appeal to draw budget-conscious consumers into a higher price range.”

Do you think Apple will target the mid-tier market with the iPhone 5C and not go after low-tier?

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  • I fully expect Apple to price the iPhone 5C higher than something like the Nexus 4, but I think $450-550 could be a little bit of a stretch. $399 could be a magic price point for them.

  • Agreed! Anything below $400 will be a nail in the competition’s coffin!

  • Marye

    I know a ton of people who are waiting for tomorrow’s announcement and hoping for a good price on the C. Let’s hope they have stock also

  • ALAN CHIU

    The 5C will just simply replace the 4/4S. I think Apple will still have 3 phone line-up. 5S at the high end, 5 as the mid tier, and 5C at the low end.

  • I’m guessing $400-449 starting price. We’ll find out soon enough.

  • Chrome262

    If its not plastic, but colored option for the metal phone, then I don’t see a price difference, or what 4s is going for now, since the 5 will fill that slot as well. If it is plastic, maybe 399 as others have said. If it was metal then I can see lots of people getting these, even over the 5s. Plastic??? who knows.

  • Al

    If the 5C is simply a “lesser” iPhone, I think this will be the biggest blunder in Apple history and the 5C will be pulled within the next 2 years. They are degrading the value of their product by introducing something that is “less” than their best.

    It may be suggested that the same thing already occurs with computers, but that’s a different market with different needs and expectations. People buy iPhones because they want (what they feel is) the best of the best. How many people are going to go into an Apple store and say, “I want the crippled iPhone”.

    By the way, when news of the 5C first came out, wasn’t it suggested that their purpose was to primarily target lower income “countries”, to take market share away from other brands of phones who dominated those specific markets?

  • Chrome262

    I agree fully, the plastic unibody MacBook did horrible, and they pulled it finally. Also, yes I do remember someone mentioned this was to increase market share in other countries, so why would it be here?
    If they were smart they would make color options for the metal phones, like the iPods. Why would you get a plastic phone, when everything, even the iPods, apple makes is metal.

  • WatDah

    “How many people are going to go into an Apple store and say, “I want the crippled iPhone”.”
    Not only that, How many people are going to look at other people with the 5C and say, “That person has a crippled iPhone (insert unimpressed/prejudice thoughts).”
    Sadly, we all know that’s how this world works nowadays.

  • Supacon

    This is not rocket science. The iPhone 4 is currently $450. The iPhone 5C won’t be cheaper than that.

  • Rickyscv

    $399 or less.

  • TheOnlyAdvantageToLiveInQuebec

    That would be pretty stupid. I rather have a 4S at 450$ (after the release of the iPhone 5S) than a cheap plastic iPhone.

    But hey, that’s Apple and who knows what will they do.

  • FragilityG4

    What about the Mac Mini? It was created to hit a lower price point in order to be more salable to a wider audience … It seems pretty successful

  • dgdgd

    I somewhat agree.

    If this was 2000 you would be 100% right. In fact, that’s exactly what Sculley did which ruined Apple. He focused on reaching a larger spectrum of the market by making more devices with more price ranges, and Apple slowly but surely died. It took Jobs to eliminate the vast majority of their devices and refocus the company on making a few, but great products.

    Anyways, today you may still be right, but the market HAS also changed. The US is no longer the major player for growth. It’s one of them, but so is China, India and other formerly small markets. A cheaper device line may actually help Apple’s sales enough that will it make up for the hit on the brand, especially if it’s done tastefully. I just hope this doesn’t slowly lead into too much diversification and another Sculley age. We’ll find out more tomorrow. It’s really hard to know what’s going on at Apple unless you work there or something anyways. For all we know, the 5C might be a great device and the only value line device they create, and they could blow us away with another ground breaking product soon. Time will tell. As an Apple fan, I’m hoping Cook et al know what their doing.

  • SeniorSuper

    I’m a pretty big fan of Apple, but really do want a 5C over the 5S. I’m not from China, or from a developing country. I’m from Canada. Fact is, I may be moving to the US soon, and don’t want to spend $700 to get a unlocked phone locked to a carrier. So, the 5C looks like a good upgrade to my current iPhone 4 which is slowly starting to die (e.g. sensors dying, speakerphone speaker etc.).

    It’s not a bad product, I just hope Apple doesn’t go the diverse product lines for different range direction. That almost killed Apple before.

  • Al

    Did you skip over my second paragraph?

  • Al

    “the 5C looks like a good upgrade to my current iPhone 4”

    How can you say that without actually knowing anything about the 5C?

  • FragilityG4

    I must have … Weird … My mistake.

  • ward09

    I’m more curious about the 5C’s specs and features than anything else at the moment. I could live with the plastic if it had decent specs.

  • Roman Campbell

    I’m disappointed . I thought this phone was going to be for the lower income level demographic ? I honestly thought apple was going to retail this phone around the 200 -250 mark . I heard they took out options like Siri or other flashy options. The phone is plastic for heaven sakes.

  • WatDah

    200-250…. May I have some of what you’re smoking please?

  • Roman Campbell

    It is a plastic phone with less capability then the iPhone 5 . And even the 4s. And it’s suppose to be geared toward low income consumers . 450 is not low income. It doesnt matter to me I have an iPhone 5 . So I’m good until the 6 .

  • WatDah

    I personally do not care for the 5C, but the rumors out there and on this site would say: “Please give me some of what you’re smoking”.

  • Chris

    I think it’ll be a hit. Almost all the casual iPhone users I know (which is the majority of iPhone users – most don’t read tech blogs!) spring for the cheapest model available. Remember how many people touted the 8 gb iPhone 3G when the subsidized price was below $100? With low subsidies likely out the gate for the 5C I think it may be the more popular of the two models by a wide margin.

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